Which of the following is NOT a finding of Stevenson and Wolfers (2013)?

Question

BlackTom AI · Accepted Answer

Stevenson and Wolfers explicitly reject the idea of a fixed “satiation” income threshold. Their empirical work shows a positive relationship between income and subjective well‑being across individuals and countries, and this positive association persists even at relatively high incomes. Therefore the statement that “There is strong evidence that beyond a fixed income threshold, additional income has no effect on well-being” is not one of their findings.

1) Relevant concepts: marginal utility of income and the income–happiness relationship are measured empirically by regressions of subjective well‑being (SWB) on income (often log income). If the coefficient on income is positive, higher income is associated with higher well‑being. A “satiation” threshold would imply the coefficient falls to zero (or becomes statistically insignificant) above some income level.

2) Step‑by‑step reasoning: Stevenson and Wolfers estimate SWB = a + b · log(income) + controls + ε. They test whether b is positive and whether it changes across income ranges. Empirically they find b > 0 in many samples and remain positive when splitting samples by income levels or by country income. That pattern shows incremental increases in (log) income continue to predict higher SWB rather than hitting a hard plateau.

3) Intermediate empirical logic: if b > 0 for the full sample and for high‑income subsamples, then additional income increases predicted SWB at all observed income levels. Testing for a threshold involves interacting income with indicators for high income or estimating separate b coefficients by income decile; their results did not show a clear income band where b = 0.

4) Why the correct answer is correct: the given statement asserts strong evidence of a plateau; Stevenson and Wolfers found the opposite—no robust evidence of a fixed threshold where income stops mattering—so the statement is not a finding of their work.

5) Other typical findings (and why they are true, not the incorrect option): they report a robust positive relationship between income and happiness across countries and over time and emphasize that using log income often fits the data well. These are actual findings, unlike the false satiation claim.

Conclusion: The statement about a fixed income threshold is NOT a finding of Stevenson and Wolfers (2013), which matches the provided correct answer.

Which of the following is NOT a finding of Stevenson and Wolfers (2013)?Single choice

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